Share sale nets US$460 million for AU Optronics

RAMPING UP The sale gives the maker of flat-panel displays a fat piggy bank from which to fund a buying spree of machinery and equipment to boost production

BLOOMBERG

AU Optronics Corp (友達光電), the world's third-largest maker of flat-panel displays used in computers and televisions, said it raised US$460.5 million selling shares to overseas investors, so it can expand production.

The company sold 30 million US depositary shares at US$15.35 each, or a 1.9 percent discount to its closing price of US$15.65 on Monday, said Hsiao Yawen (蕭雅文), a spokeswoman for the Hsinchu, Taiwan-based company. Each US depositary share is equal to 10 common shares.

AU Optronics is trying to buy machinery and equipment to boost its production as competitors including Hon Hai Precision Industry Co (鴻海精密) expand in Taiwan, Korea and Japan. The average selling prices of large panels have dropped since the beginning of the third quarter of last year. The prices fell 6.5 percent in the first quarter of this month from the end of last year.

The company gave Goldman Sachs Group Inc, the sale's arranger, the right to sell an additional 3 million of the shares depending on demand. Shares of AU Optronics fell 1.4 percent to close at NT$49.30 on the Taiwan Stock Exchange.

The Tainan-based company is studying factors that may help decide where to build the plant, including the supply of components, spokesman Eddie Chen (陳彥松) said by phone today.

"We're still reviewing the plan," Chen said. The company hasn't picked a site, decided how much to spend on the plant or when to build it, he said, denying a Chinese-language newspaper report today that the company will complete the plan by late this month or early next.

The company's rivals AU Optronics and Chunghwa Picture Tubes Ltd (中華映管) have already built module plants in China to benefit from cheaper labor costs and because Taiwanese notebook computer makers such as Quanta Computer Inc (廣達電腦) have moved production lines there.

Chi Mei has been outsourcing module assembling services from Coretronic Corp (中強光電), Chen said. Coretronic, a monitor maker, has facilities in China, according to the Taiwan Stock Exchange Web site.

Separately, LG.Philips LCD Co, the world's largest producer of liquid-crystal displays, is planning a sale of as much as US$2 billion of stock this week, investors say, in what would be third-biggest in Asia outside Japan this year.

LG.Philips, based in Seoul, is selling shares to fund a 20 percent increase in capital spending this year to compete with Samsung Electronics Co and AU Optronics in the US$35 billion industry.

The shares may be priced after trading closes in Seoul tomorrow, said Jung Kyun-sik, a fund manager at Shinhan BNP Paribas Investment Trust Management Co.

Shares of LG.Philips fell as much as 3.7 percent and traded 3.6 percent lower at 44,900 won.